Question: What is the maximum loanable amount created with a $1,000 deposit and a 5% reserve ratio? Show your work. Will the money supply increase or

What is the maximum loanable amount created with a $1,000 deposit and a 5% reserve ratio? Show your work.

Will the money supply increase or decrease if the FOMC purchases government securities from financial institutions? Graph the impact to the Money Supply & Money Demand equilibrium graph.

Will interest rates increase or decrease if the FOMC sells government securities to financial institutions? Graph the impact to the Money Supply & Money Demand equilibrium graph.

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